British MPs: Google's UK tax deal is 'disproportionately small'

Eric Schmidt, chairman of Google parent company Alphabet.
Gonzalo Arroyo Moreno/Getty Images
Britain's Committee of Public Accounts said on Wednesday the amount Google agreed to pay in a tax settlement with the government was "disproportionately small" when compared with the size of the company's business in the country.

In January 2016, Google agreed to pay £130 million in back taxes in Britain — prompting criticism from opposition lawmakers and campaigners who claim this amounts to a 3% tax rate.

The committee's report will be a blow to Chancellor George Osborne, who initially hailed the deal as a "major success." Other Conservative politicians have already declined to endorse this claim.

The committee calls on the UK tax authority (HMRC) to monitor the outcome of other tax authorities' investigations into Google, and to re-open its settlement with the company if relevant new evidence became available.

Its report criticises the lack of "transparency" over the settlement. "In the absence of full transparency over the details of this settlement and how it was reached we cannot judge whether it is fair to taxpayers," it says. "The sum paid by Google seems disproportionately small when compared with the size of Google's business in the UK, reinforcing our concerns that the rules governing where corporation tax is paid by multinational companies do not produce a fair outcome."

The Committee's report takes issue with this call: "Google's stated desire for greater tax simplicity and transparency is at odds with the complex operational structure it has created which appears to be directed at minimising its tax liabilities. Google admits that this structure will not change as a result of this settlement."